Should the Advanced Measurement Approach for Operational Risk be Discarded? Evidence from the Chinese Banking Industry

The Basel Committee on Banking Supervision (BCBS) states that in addition to the fact that it lacks simplicity, the Advanced Measurement Approach (AMA) must be discarded because the flexibility of AMAs does not narrow as envisioned prior. This paper discusses whether this judgment of the BCBS holds for the Chinese banking industry. We first review the development of operational risk data collection and AMAs in China over the past decade. Then,...